My plan right now – as I type these words – isn’t to compile an in-depth piece on HMO’s, because that’s been done and dusted – right over here, in my HMO (House In Multiple Occupation) Guide. Go there if you’re still trying to figure out the basics.
So, the purpose of this blog is to focus on the tenant sourcing and management side of HMO’s, because that’s the stage – particularly the latter of the two – where most novice HMO landlords lose the will to live, and then contemplate going back to the Single Let model (which is like Disney World in comparison to HMO’s).
However, before you retreat and wave the white flag, perhaps I’ve got a cost-effective HMO management solution for you, which will make the whole situation bearable.
Finding HMO tenants
1) Ask existing tenants
Yup, it’s a no-brainier (or at least it should be).
Asking existing tenants whether they know of someone suitable to rent a room is often one of the most effective (and cheapest) means of replacing tenants in HMO’s.
2) Local high-street agent
As always, you can pop down your local high-street agent and get them to source you a tenant… for an extortionate amount of cheese. It’s also one of the least favoured option by HMO landlords, because most HMO landlords are experienced enough to source their own tenants, so they don’t need to rely on the high-street solutions.
3) Online agents / house share websites
If tactic #1 fails, this is where I’d look for answers!
There are a shit-ton of online letting agents out there, along with house/flat sharing websites, but the following two are the winners I’d recommend utilising (because they’re free, effective and have a proven track record)…
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OpenRent have been causing mayhem in the online lettings world for quite some time now, and that’s because of their 5 day free trial, which remarkably includes advertising your property on Rightmove, Zoopla & Prime Location. Yup, all for free (and no credit card details required, or anything equally as shady)!
For more details, read my OpenRent review, along with a bunch of feedback from other real landlords who have used their service.
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SpareRoom is UK’s most popular House/Flat sharing website, and the odds are you already use their their platform to generate leads if you’re a HMO landlords.
Spareroom won’t distribute your properties across different platforms (e.g. Rightmove and Zoopla) like OpenRent, but that’s ok, because they don’t need to – they receive more than enough prospective HMO tenant’s directly scouring their website.
My advice? Use both OpenRent and Spareroom to find tenants quickly, they’re free!
Regardless of how you source your tenants, I can’t emphasis the importance of thorough referencing! There’s also an added element of ‘match-making’ when it comes to finding suitable tenants for a HMO, because you need to ensure everyone will play nice with one another. Unsurprisingly, domestic controversy with in HMO’s is not uncommon, not at all.
HMO Management Solutions
Most HMO landlords manage their own properties, which includes the soul-destroying tasks of finding tenants, tenant referencing, arranging tenancy agreement contracts, repairs management, rent collection etc.
It’s a lot more hassle than Single lets, simply because you’re dealing with multiple tenants, which means you’re collecting rent and arranging contracts from each one of them. That’s precisely why many landlords prefer handing over the day-to-day running to specialist HMO management companies and letting agents.
Of course, if it’s your full-time job, it shouldn’t really be an issue.
1) Local high-street agent
Your local high-street agent will most likely offer HMO management services, on either a per room or per property basis. From the research I’ve done, most charge between 12% – 15% of the rental income.
Generally speaking, agents charge more for managing HMO’s than Single Lets simply because of the extra work required to manage them. You’ve got no argument from me there. I get it!
2) Online agents & HMO management services
After running a few Google searches with the expected keywords, I came across a few online HMO management services that offer solutions much more competitive rates than high-street agents (I’ll let you run your own searches as there isn’t anyone I can personally recommend). Of course, that’s what you’d expect from an online agent. If you’re not up to scratch with the whole online agent ‘thing’, I recommend hustling through my online letting agent guide.
When HMO management solutions make particular sense
Needless to say, there is an added expense when splashing out on HMO management solutions, so the figures need to stack up, and it’s up to you to determine what’s feasible (after crunching all the numbers).
However, that said, in some cases very particular cases, running a HMO without external management services often doesn’t make sense in certain situations:
Not ideal for newbies
I cannot stress how much time HMO’s takes to setup, which includes conducting viewings, filtering tenants, meeting legal obligations, and managing HMO’s in general. Those are aspects of being a landlord that you can’t learn over night; it’s takes years of practical hands-on experience. Consequently, I don’t think it’s an ideal scenario for a brand-spanking-new landlord to delve straight into HMO’s; start with Single Lets first, and then hack off the training wheels after gaining experience.
However, life happens, and we’re all entitled to make our own decisions. If you do go diving into the deep-end with a HMO as your first BTL, I’d definitely consider looking at a management service, even if only for a year.
Long distant landlords
If you live far away from the property!
Unlike Single-lets, which are often manageable from long distances, it’s extremely different to manage a HMO from a long distance, whether you’re an experienced landlord or not. HMO’s typically have much higher tenant turnover rates, and require a lot more attention in terms of maintenance and repairs. So it’s a hell of a easier when someone’s around.
Being a landlord is a part-time job for many of us, so in a similar vain to living far away, if you’re unable to address matters efficiently to an acceptable level, then you’ll quickly find yourself dealing with… several dissatisfied tenants. Not just one.
A friend of mine self-manages a couple of HMOs (which houses about 20 or so tenants in total) and his phone is frequently buzzing with enquiries, varying in nature. When I say “frequently”, I mean a lot more than I would personally like, or expect from Single Lets.
If you want a layer of protection between those calls, and would prefer to reduce the probability of being disturbed, then you may want to consider a management service.
The thing with being a landlord is that you can’t just “switch off”, because you’re providing a service 24/7 (which will more likely to be the case with a HMO)!